Health Insurance Regulatory Framework — IRDAI Circulars & Updates

The layers of the rulebook

Health insurance is regulated by IRDAI under two Acts: the Insurance Act, 1938 and the IRDAI Act, 1999. Under them sit regulations, and under the regulations sit Master Circulars that carry the working detail.

The current set is the IRDAI (Insurance Products) Regulations, 2024 with the Master Circular on Health Insurance Business of 29 May 2024, and the 2024 policyholder-protection regulations with their Master Circular of 5 September 2024. These replaced the 2016 health insurance regulations and the 2017 policyholder-protection regulations, which older material still cites.

Rules at the start and at a claim

Free look. For a policy with a term of one year or more, the policyholder has 30 days from receipt of the policy document to review it, whatever the channel through which it was sold. Older material quotes 15 days for policies not sold through distance marketing; that distinction no longer applies.

Claims. A reimbursement claim has to be settled within 15 days of submission; older material quotes 30 days, or 45 where the claim was investigated. If the insurer delays, interest is payable at the bank rate plus 2%. A cashless request is decided within one hour and final discharge authorisation given within three hours.

Waiting periods. A waiting period for pre-existing diseases cannot exceed 36 months. An initial waiting period at the start of cover, by contrast, is a product feature and not an IRDAI rule. Where a policy has one, the wording typically applies it to illness and not to accidental injuries; the policy wording decides.

The moratorium

After 60 continuous months of cover, a policy or claim cannot be contested for non-disclosure or misrepresentation unless fraud is established. Older material quotes 96 months. Permanent exclusions written into the policy still apply after the moratorium.

This rule comes from IRDAI's 2024 Master Circular. It is not section 45 of the Insurance Act, 1938, which is a separate three-year rule for life insurance policies.

Complaints

A complaint goes first to the insurer, which has to resolve it within 14 days; IRDAI's complaint portal is Bima Bharosa. If the complaint is rejected, unanswered for one month or unsatisfactorily resolved, it can go to the Insurance Ombudsman within one year. The Ombudsman charges no fee and can award up to ₹50 lakh, a cap raised from ₹30 lakh from 10 November 2023.

Separately, a NITI Aayog report of 2021 on India's missing middle estimated that at least 30% of the population had no financial protection for health.

Rules at a glance

Key points

• IRDAI regulates health insurance under the Insurance Act, 1938 and the IRDAI Act, 1999.
• The 2024 product and policyholder-protection regulations and their Master Circulars replaced the 2016 and 2017 regulations.
• Free look is 30 days for policies of one year or more, whatever the sales channel.
• Reimbursement claims are settled within 15 days; delay attracts interest at bank rate plus 2%.
• The moratorium is 60 continuous months, after which a policy cannot be contested for non-disclosure or misrepresentation except for established fraud.
• The Insurance Ombudsman's award is capped at ₹50 lakh.
• An initial waiting period is a product feature that typically does not apply to accidental injuries.

Common misunderstandings

• The moratorium is not section 45 of the Insurance Act: section 45 is the three-year rule for life policies, and the 60-month moratorium is the health rule from the 2024 Master Circular.
• The moratorium does not make every claim payable: established fraud and the policy's permanent exclusions remain.
• An initial waiting period is not an IRDAI rule: where it exists it is a term of the policy.
• The Ombudsman is not the first stop: the complaint has to be made to the insurer first.
• The 2016 and 2017 regulations are not current: citing them dates the material.

Questions people ask